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First quarter operating results

Public Joint Stock Company Grindeks’ net turnover for the first quarter of 2003 reached 4,874,899 lats, which is 36.2 % more than the figure for the corresponding period of 2002.

Net profits for the period under review come to 465,248 lats, whereas net profits for the first half of the previous year were341,206 lats.

The pure profit viability according to the results from the first quarter of 2003 was 9.5 %. Moreover, projected net turnover has been exceeded by 10.6 % or 466,489 lats. The level of gross profit during the first quarter of 2003 reached 30.7 %.

The sales volumes of final dosage formulations, which make up 75.2 % of Grindeks total revenues, rose by 31% in comparison with the corresponding period of 2002.

“Significant growth has been attained in all export markets including 54.3% in Russia, compared to the 41.8% in the CIS states as a whole,” comments Grindeks Chairman of the Board, Valdis Jākobsons. “This is primarily attributable to the increased turnover of Mildronate, which has risen by 62% compared to the corresponding period from the previous year. Mildronate’s share of Grindeks retailed final dosage products comes to 43.9%, which is considered to be a certain risk factor,” continues V. Jākobsons.

During the first quarter, there was also a significant growth in the sales of psychotropic products, as well as those of Tailenol vitamins. The exports of Grindeks’ filial company – Tallinn Pharmaceutical Plant have also risen. Compared to the corresponding period in 2002, TPP’s exports rose by 20%. In particular, there was a sharp increase in the exports of Kapsikam ointment, which rose by 22% during the period under review.

Compared to the first quarter of 2002, exports of Grindeks active substances rose by 20.6%. This is primarily due to an increase in the sales volumes of Oxitocine and Mildronate.

During the first quarter, Grindeks continued to introduce products into new markets – sales of Kapsikam ointment have begun in the Ukraine, whilst

Viprosal B ointment has been registered in Hungary. Undoubtedly, one of the most important events during the first quarter was the Latvian State Agency of Medicines’ presentation to the company of the Good Manufacturing Practice Certificate, which testifies to the compliance of Grindeks’ products to the highest quality standards.